Opower already gives its users the ability to see if they can use less energy than houses similar to theirs. Now they want to make that competition personal, by opening up your energy use to your social network.

What’s the best way to get a person to do something? Make them compete for it. That’s how Opower, a company that sends a comparative energy bill that lets you see how much power you use versus people in similar houses, has helped drastically reduce power use among its users. But what’s better than competing with random, faceless strangers? Competing with your friends. That’s why Opower is about to roll out a new plan that lets you add your utility bills to Facebook to see if you can use less than your network.

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“The way we think of it is as efficient behavior, rather than conservation,” says Ogi Kavazovic, Opower’s vice president for marketing and strategy. “The problem we’re going after is the fact that around 20% to 25% of energy in U.S. homes is wasted–not that you could use less if you sacrificed, but blatantly wasted. What we’re after is to engage people with the enormous potential for them to do better. It’s not just about saving energy or carbon, it’s about saving money.”

It’s not just about saving energy or carbon, it’s about saving money.

The fast-growing company bills itself as “a new customer engagement platform for the utility industry.” It is now the primary way that more than 60 utilities interact with their customers, by giving them a rich picture of their energy use, comparing their use with others, and rewarding them for consuming less.

If you thought that, as a grown-up, you are immune to the simple psychological principles employed by Opower, you will be disappointed. Three decades of empirical research by behavioral psychologists reveal that two universal motives profoundly influence human behavior: the desire to out-compete our neighbors and the desire to earn praise for whatever we do.

When it comes to energy, a simple bar chart and smiley face are enough. That, in essence, is the power behind Opower’s home energy reports. The two-page mailer, which arrives in more than 5 million homes each month, compares a customer’s energy consumption to people with similar homes. If you’re outperforming others in your class, you’ll find one or two congratulatory smiley faces affixed to your report. A website also allows customers to dig into their energy usage, SMS alerts warn about high bills, and customer service calls include energy efficiency tips. All of that’s enough to shave about 2% to 4% off the average person’s energy use.

For every million people we engage this way, we save enough energy to take 20,000 to 40,000 homes off the grid.

That might not sound like much, “but it’s incredibly significant,” says Kavazovic. “The data basically says for every million people we engage this way….we save enough energy to take 20,000 to 40,000 homes off the grid. We’ve been going for four years, and the savings keep going up and up.”

Utilities, looking to energy conservation instead of building new power plants, like it because behavior change is one of the most cost-effective ways to cut energy consumption. Opower claims to beat out CFLs, weatherization, and high-efficiency appliances in terms of energy saved per dollar spent; only CFLs ($0.02) are cheaper.

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The most recent effort is to go social. The principle is the same, but Opower figures by making the comparison more personal, it will also become more effective. “One hundred anonymous homes is good, but 100 friends of yours who have friends just like yours is more powerful,” says Wayne Lin, who is leading Opower’s social application project. “We call it ‘friends, not neighbors.'”

One hundred anonymous homes is good, but 100 friends of yours who have friends just like yours is more powerful.

Opower will use Facebook as a platform to invite your friends to link their utility data. They can make much finer comparisons about energy use (at the moment, comparisons are based on the aggregate energy profiles of 360,000 customers) and join teams to see how much energy can be saved among friends–or between them. With 800 million active users, according to Facebook, the potential is enormous. “We’re going to the biggest social network in the world to create a more personalized experience,” says Lin.

Whether it will work, however, is still to be seen. Opower plans to launch its free social platform in early 2012, although it’s already taking names–on Facebook and the web–for early signups.

“Something like this has never been done,” says Lin. “We’re really excited about what kind of change this can drive.”

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About the author

Michael is a science journalist and co-founder of Publet: a platform to build digital publications that work on every device with analytics that drive the bottom line.
He writes for FastCompany, The Economist, Foreign Policy and others on science, economics, and the environment. His favorite topics are wicked problems -- and discoveries such as how dung beetles rely on the light of the Milky Way to navigate (and all that says about the human condition on Earth)